[1]: 11 The MTOC was started by Francis Boardman Clapp, who had come to Australia from the United States in 1853 to search for gold.

[2] In 1885, the Government of Victoria offered MTOC a 30-year exclusive contract to operate a tram system using either horse, steam or cable power.

[1]: 11  Clapp chose to use the cable system which was being used successfully in both Chicago and San Francisco.

The 12 councils which were in the area to be serviced by the MOTC formed the Melbourne Tramway Trust.

[1]: 11  The Trust laid the tracks, bought land and built the cable winding houses.